An American observer comments on French politics.
The other interesting question is whether we will be creating a new cycle. Remember, that most of the problems in Europe were caused by German bank having a huge inflow of cash that ended fueling wild property booms in Ireland and Spain. Also, being lent to places like Greece and Italy on the assumption that since no eurozone state would ever be allowed to Greek bonds were therefore essentially the same as German ones. When the bubbles burst all over Europe, the craze for “growth through austerity” turned a potentially mild downturn into the worst financial crisis since the Great Depression. Still, the money that Krugman, et al. see flooding into German banks has to go somewhere. Maybe now is the time to borrow heavily and get involved in, say, Irish and Spanish property. After all, property values are so low since the crash….(lather, rinse and repeat)
Krugman can be alarmist about these things. I often find Wolfgang Munchau's judgments better about what sorts of muddling and impasses by leaders and policymakers will occur.
Although Krugman is an alarmist, he's been more often right than wrong, on the Euro crisis at least.I don't think that level of austerity is sustainable anyway and anyone who has eyes to see and a brain to think without preconceived notion can understand that it's created a vicious circle. I find it funny (haha..not) that apparently that's what the Republicans have decided to choose for their economic platform.
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